Issuer officials who said Treasury's final issue price rules are a vast improvement over earlier proposals nevertheless raised concern that they might discourage competitive sales of bonds or create problems for issuers if underwriters run afoul of the rules.

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JPMorgan got final approval from Bear, Stearns & Co. shareholders yesterday to complete the deal that will end the reign of the 85-year old investment bank, bringing to the forefront questions about employee retention that have swirled in the muni market since March when the bailout of Bear first came to light.

The deal cleared the final hurdle yesterday as 84% of Bear shareholders voted to approve the sale to JPMorgan and shutter what was once the fifth-largest U.S. investment bank.

The deal is expected to close by the end of the day today, according to JPMorgan. Under the agreement, Bear Stearns shareholders will get 0.21753 JPMorgan shares for each Bear share at the completion of the merger, which translated into a share price of $9.48 at the close of trading yesterday. The total size of the deal will equal $2.3 billion.

The vote did not come as a surprise, as JPMorgan had increased its Bear holdings to 49.5% of the outstanding shares since the deal was announced March 16. Shareholder complaints early on caused JPMorgan to raise the purchase price over the original $2 per share offer put forth when the deal was first announced.

"That's the end. Everybody has agreed and JPMorgan owns 49% of Bear Stearns, so the outcome was not in question," said Richard Bove, a bank analyst with Landenburg Thalmann & Co.

The decision means that the firm and its midtown Manhattan headquarters will now be taken over by JPMorgan.

JPMorgan and the Federal Reserve Bank of New York also completed the previously announced sale of $30 billion in Bear Stearns assets to the Fed. JPMorgan said the sale, originally intended to close at the same time as the merger, will close on or around June 26 to "help ensure the smooth transfer of this large portfolio."

It also means unemployment for many employees some from Bear Stearns and some of the JPMorgan employees who will be replaced by their Bear counterparts.

"I think a lot of people will lose their jobs. I guess they'll keep most of the people in the prime brokerage business and some of the other folks around," said Duncan Hennes, founder of Atrevida Partners and the chair of the group of banks that bailed out hedge fund Long-Term Capital Management in the late 1990s. "It's going to be a bloodbath, but I think everybody knew that going into it."

JPMorgan this week axed its upstart affordable housing division and will replace it with Bear's more established housing unit as part of the merger, according to several market sources.

The two bankers who led JPMorgan's affordable housing unit, Emily Youssouf and John Crotty, were no longer working at the company as of yesterday. Several market sources said they had heard that Bear banker Kent Hiteshew would be bringing his housing team over to replace JPMorgan's. JPMorgan spokeswoman Tasha Pelio said the company would not confirm specific names of people who had been laid off. Pelio also said she was unable to confirm whether or not Hiteshew's group would be coming to JPMorgan.

JPMorgan had tapped Youssouf and Crotty to start up its affordable housing unit in October. Youssouf had served as president of the New York City Housing Development Corp. since 2003 and Crotty had been her chief of staff and an executive at the corporation. Youssouf came from the private sector and had worked for a number of investment banks. She had been credited with turning the scandal-ridden HDC agency around. Under her leadership, the corporation was the nation's top issuer of single- and multifamily housing bonds in 2006, selling $1.75 billion of bonds, according to Thomson Reuters data.

Bear's housing business was much more established than JPMorgan's. Since 2003 Bear has served as senior manager on $12.56 billion of housing bond sales, including $2.39 billion last year, according to Thomson Reuters data. JPMorgan, by comparison, senior managed $2.09 billion of housing bond sales, including $374.2 million last year, according to the data.

Hiteshew is well known at HDC and the New York State Housing Finance Agency which have worked with him on housing deals in the past.

"Kent is one of the more knowledgeable bankers on the street," HFA president and chief executive officer Priscilla Almodovar said in a statement. "He has been very helpful to us both on the single-family and the multifamily side, particularly as we expanded the agencies' work during these tough markets."

An unknown number of other bankers were laid off on Wednesday, according to a market source.

"I do know that they did a round of layoffs," a market source said. "It was a rough day at JPMorgan Chase yesterday."

Pelio said she could not confirm that there had been layoffs on Wednesday but did say, "There have been layoffs throughout the past few weeks within all different business groups."

Several market sources said that JPMorgan appeared to be replacing some of its municipal bankers with Bear bankers.

"Clearly they are bringing over a whole bunch of people from Bear and these are hard economic times so every firm is kind of cutting back staff," a market source said. "So at a minimum [staff levels] would be frozen and if you're bringing in a new group of people you have to get rid of some you already have. Not a pretty picture."

Steven Dworkin, a senior managing director with Bear Stearns on the west coast, is also expected to be moving over to JPMorgan with most of his group.

At the same time, other Bear employees are looking to move on.

Bear's top tobacco banker, Kym Arnone, left for Lehman Brothers after the deal was originally announced and market sources have said that Neil Flanagan, most recently in derivatives marketing at Bear, is expected to join Depfa First Albany Securities LLC.

The entire derivatives desk at Bear Stearns is expected to be fired, according to sources.

While it is difficult to determine what JPMorgan is looking for in those it is seeking to keep, market sources have explained that many of the sell-side bankers with issuer-specific relationships are more likely to be kept on than are those in sales, trading, or underwriting.

While specific relationships and issuer clients would be valuable to JPMorgan, those in sales, trading, or underwriting may have some of the same relationships as professionals on similar desks at other firms, market sources have said.

As employees of the firms look to leave they will have to mind the anti-competition practice known as "garden leaves." Under this rule, professionals that leave a firm are restricted from starting at a new firm for a select period of time, often three months.

The practice is intended to ensure that departing employees do not bring clients and business with them from the old employer.

JPMorgan spokespeople could not confirm whether the bank would be holding firm on any anti-competition policy. However, as the controlling firm, JPMorgan would likely have to pay the salary for those departed employees during the period of time when they are not allowed to work at a new firm.

While in theory, the practice makes sense it has some issuers worried about having access to those bankers whom they know and trust. This further illustrates the value for JPMorgan in keeping those with developed issuer contacts.

Frank Hoadley, the capital finance director for the state of Wisconsin, said at the Municipal Forum of New York Annual Awards Dinner last week that this was one of his main fears.

"I think that these garden leaves are very much interfering with issuers' right to work with who they choose to work with and I'm very concerned about that," Hoadley said.